The Department of Education yesterday proposed a Gainful Employment rule that aims to “protect students from unaffordable debt or insufficient earnings from career training programs” by threatening to cut off funding to institutions that do not provide sufficient education beyond what workers who do not have any education beyond high school possess.
Schools would have to ensure that graduates can afford to make their yearly debt payments, which means their debt-to-earnings ratio will need to be equal or less than 8% or equal or less than 20% of their discretionary earnings, while also showing that at least half of their graduates have higher earnings than a typical high school graduate who never pursued a postsecondary education.
Students would be required to receive detailed information about what they are likely to pay for postsecondary programs, how much they are likely to earn after completing a credential, and whether they are selecting a program that is likely to leave them with unaffordable debt.
“President Biden has taken unprecedented steps to fix our broken student loan system and help millions of Americans struggling with student debt, creating new opportunities for borrowers, their families, and their communities. At the same time, we need to hold colleges accountable for unaffordable costs and better protect students from programs that fail to deliver real value and upward mobility,” said U.S. Secretary of Education Miguel Cardona in a statement. “The rules proposed today are about helping ensure that when students invest in a postsecondary education, they get a solid return on investment and a greater shot at the American dream.”
The rule, which applies to for-profit institutions, was scheduled to be released in 2022, but was delayed after months of deliberations and debate. It is aimed at protecting about 700,000 individuals who enroll annually at 1,800 “low-performing” institutions.
A trade group representing for-profit institutions said the rule was unfair.
“The rule unfairly targets programs at proprietary institutions and fails to account for the unique challenges facing students and communities that career-oriented programs serve,” said Jason Altmire, president of Career Education Colleges and Universities, in a statement. “During the public comment phase, we urge the Department to consider sensible changes that improve the rule to protect all students and hold public, private nonprofit, and for-profit institutions equally accountable for their outcomes.”
